When employers leave vacation pay undefined in an employment contract, courts are likely to step in and fill the gap if a dispute breaks out. That’s the key takeaway from a recent Alberta Court of Justice ruling involving a salaried superintendent who claimed he never received proper holiday pay.
Despite the two parties agreeing on a yearly salary, they never pinned down whether it included separate vacation pay — so the court applied provincial legislation to settle the question.
The supervisor, R.H., brought a claim against Lawrence Meier Trucking Ltd. for unpaid holiday and vacation pay for an 18-month period. The court heard evidence from R.H., R.H.’s spouse and L.M., the director of the defendant company. While R.H. and the employer agreed that R.H. had been promoted to a superintendent role, they offered differing views on whether his annual salary of $120,000 included separate vacation pay.
The court noted there was no written employment contract setting out R.H.’s entitlement to holiday pay or time off. Before his promotion in early 2015, R.H. had earned hourly wages plus a standard holiday pay rate of 9.6 per cent, and in the previous calendar year he received approximately $122,000, including those vacation-related amounts.
Once promoted, however, R.H. became a salaried employee at $120,000 per year, without a documented discussion about how vacations would be handled. According to the court, “neither the Plaintiff nor the Defendant paid any attention to either holiday pay or vacation allotment.”
Switch from hourly to salary
Both parties acknowledged the shift in R.H.’s status: he moved from being an hourly-paid supervisor to a salaried superintendent. R.H. assumed he would continue to receive a vacation pay top-up, while Lawrence Meier Trucking believed he now had paid time off folded into the new salary. The court observed that the defendant “expected the Plaintiff to take time off,” but there was no precise agreement on how many days or weeks that might be — or whether R.H. ever used any vacation at all.
Central to the dispute was R.H.’s on-call requirement. The employer conceded that R.H. was “on call 24 hours a day, 7 days a week.” R.H. stated he “felt responsible to attend to his duties on many days,” including weekends, because he needed to ensure compliance with safety and government regulations at job sites.
Lawrence Meier Trucking argued R.H. could have managed things more remotely, relying on workers to report incidents. The court found that was inconsistent with his “responsibility of being directly involved and ensuring compliance … on all jobsites.”
Lack of clarity on vacation entitlement
When the court examined how to interpret R.H.’s entitlement, it looked to provisions of the Employment Standards Code. Specifically, the court referenced section 34(1)(a), which sets out “2 weeks after each of the first 4 years of employment” as the minimum vacation. Although R.H. had been employed for 32 months before his promotion and 18 months afterwards — 50 months in total — the employer had not factored a separate vacation-pay percentage into his annual salary.
The court rejected the idea that moving to salary status “constitutes starting over in terms of calculating the employee’s term of employment.” Instead, it decided the 50-month mark meant R.H. was still within the first four years of service, making him eligible for at least 4 per cent vacation pay.
The judge did not accept R.H.’s argument that he should receive 9.6 per cent, given his previous hourly arrangement. However, the decision determined “it is appropriate for the Court to imply that there would have been an acknowledgment of the Plaintiff’s entitlement to the legislated 4% vacation pay.”
Court’s view on implied terms
In its reasoning, the court referred to established principles for implied contractual terms. Specifically, courts may infer conditions in the absence of a formal agreement when they are “so basic or necessary” that both parties would have agreed to them had they addressed the issue.
The court also cited the practice of interpreting ambiguous employment terms in favour of the employee, noting that an employer “is the ‘expert’ in personnel matters” and is typically considered the author of any contract terms — or lack thereof.
Here, the court observed that both sides carried some responsibility for the confusion. The defendant failed to clarify if and how vacation time was integrated into the superintendent salary, while R.H. did not formally confirm whether holiday pay was continuing separately. Nonetheless, since R.H. “never really in a position to take a day off,” he remained unaware of how his time off was being credited or compensated.
The compensation award
Using the 4 per cent figure from the Employment Standards Code, the court calculated R.H.’s total outstanding amount. It covered the 18-month stretch between January 2015 and the end of June 2016. Over 2015, R.H. earned approximately $115,384.50, making his vacation pay entitlement $4,615.38 for that year. For the first half of 2016, the prorated salary was $60,000, resulting in $2,400 in vacation pay.
That would have totalled $7,015.38, but the court required a deduction for a one-week period in July 2015 when R.H. was paid despite not working. The court deemed that amount “only fair” to subtract. After applying that deduction, the final award to R.H. was $4,707.69.
While acknowledging R.H. had made substantial claims, the court was careful to limit the vacation pay to the basic statutory requirement. It declined to adopt the 9.6 per cent rate that R.H. believed should carry over from his hourly arrangement, concluding that this figure was never discussed in relation to his new position. Instead, the court’s ruling centred on the straightforward application of the minimum vacation entitlement under provincial law.
For more information, see Hoefman v Lawrence Meier Trucking Ltd., 2025 ABCJ 13 (CanLII).